Commerce and trade have been around since the dawn of human civilization. Modern commerce started with small focused shops and went on to become the giant Walmarts of the world. Electronic commerce emerged in the early 1990s and since then everyone has been striving to go digital.
E-commerce facilitates the growth of online business. It can be broadly categorized into:
- Online marketing
- Online advertising
- Online sales
- Product delivery
- Product service
- Online billing
- Online payments
Types of e-commerce
- Business-to-business (B2B) e-commerce
- Business-to-consumer (B2C) e-commerce
Business-to-business (B2B) e-commerce refers to the electronic exchange of products, services or information between businesses. Examples include procurement of raw materials for manufacturing units, providing self-service capabilities for dealers and distributors of finished products, etc.
In 2017, Forrester Research predicted that the B2B e-commerce market will top $1.1 trillion in the U.S. by 2021, accounting for 13% of all B2B sales in the nation.
(Fig1: Forrester Wave™: B2B Commerce Suites for Midsize Organizations, Q3 ’17)
Offline vs online shopping
Business-to-consumer (B2C) e-commerce is the retail part of e-commerce on the internet. It is when businesses sell products, services or information directly to consumers. The term was popular during the dot-com boom of the late 1990s, when online retailers and sellers of goods were a novelty.
(Fig2: Forrester Wave™: B2C Commerce Suites, Q1 ‘17)
Given the stratospheric rise in e-commerce in recent years, many analysts, economists and consumers have debated whether the online B2C market will soon make physical, brick-and-mortar stores obsolete. That fear is now quelled with brick-and-mortar stores venturing online, and online stores giving product experiences through physical stores and experience studios.
This merged approach marked the birth of omni-commerce solutions where customers can seamlessly move between online and offline sales experience.
Compared to traditional commerce, e-commerce provides
Greater reach – If it can be shipped, it can be sold. With the internet bringing the world into everyone’s pockets via smart phones, the potential to reach out to customers around the globe is infinite.
Round the clock operations – e-commerce runs itself with no need for human interaction to make a sale. It may need assistance to improve buying experience but that’s not imperative. E-Commerce stores run round the clock providing products and services to their customers.
Low operational costs – e-commerce saves significantly when it comes to real-estate costs required to set up a traditional business. A wider range of products that can be sold with less manpower required to run the stores. This results in significant lowering of costs and increase in profit margins for businesses.
High scalability – e-Commerce is not restricted by the maximum foot-falls a physical store can have without deteriorating their buying experience, making it a highly scalable model of doing business.
However, despite all its benefits e-commerce still lacks the human touch that makes a buying experience special. E-Commerce is still facing some major challenges with regards to customer trust, satisfaction and time consumption.
Research from BigCommerce has found that Americans are about evenly split on online versus offline shopping, with 51% of Americans preferring e-commerce and 49% preferring physical stores. However, 67% of millennials prefer shopping online over offline. According to Forbes, 40% of millennials are also already using voice assistants to make purchases, with that number expected to surpass 50% by 2020.
Going digital is the future and to make it even more exciting, e-tailers are exploring new frontiers to give unparalleled customer experience through:
- Predictive Marketing
It’s a brave new world out there.